The FTX Contagion Continues, Threatening the Future of the LGBTQ+ Victory Fund
Reconciling allegedly stolen money from FTX users that was donated to charities will likely be decided by the courts
This is part of Decential’s web3 and blockchain coverage celebrating Pride Month. Read it all here.
Legacy non-partisan political action committee the LGBTQ+ Victory Fund is fighting the potential claw-back of a $1.1 million donation from the bankrupt and disgraced crypto exchange FTX.
In a complicated twist, a great deal of the money FTX donated to various causes and political campaigns wasn’t theirs in the first place. It belonged to the innocent FTX users who had their money allegedly stolen. These individuals, and the advocacy groups who received the donation funds, are all victims.
The LGBTQ+ Victory Fund isn’t the only organization under threat. There were recipients from other advocating groups fighting for the underrepresented, such as the $2.25 million that went to Women Vote!, the independent expenditure arm for Emily’s List. The news threatens the broader mission of equality and inclusion in the space, on both sides of the coin.
Robert Rueter, who heads “Project X” - an incubator for social impact start-ups at the University of Nevada at Las Vegas Office of Economic Development - has been monitoring LGBTQ+ Victory Fund-FTX developments in Washington. He’s also the Executive Director of WebQ, a non-partisan collective dedicated to LGBTQIA+ cultural diplomacy. “The queer community is facing an imminent threat,” Rueter said to me in a recent interview. “The courts could give LGBTQ+ Victory Fund and other social impact recipients 30 days’ notice to return donated funds.”
According to Rueter, the LGBTQ+ Victory Fund deploy resources as fast as they receive them and operated on a $6.7 million budget in 2022. A potential loss of about 16 percent of its budget would be devastating.
The WebQ board (left to right) Jennifer Burns, David Torres, Robert Rueter, Riah Gonzales-King, Nicholas Torres, Dr. Robert Rippee, Jim Obergefell, Mark Garcia, Latoya Holman
“This case underlines a grim reality where a vulnerable group, despite due diligence, has been victimized by a stronger, unscrupulous actor,” he said. “WebQ vehemently opposes policies that punish victimized parties for the wrongdoings of unethical factions. Such actions deepen existing inequities and unfairly disadvantage those already wronged, while emboldening the malicious actors.”
The blockchain industry, known for its innovative spirit and drive for decentralization, must stand up and offer meaningful support, he said.
WebQ’s Business Alliance is putting 20 percent of all contributions received into escrow. If Victory Fund is forced to repay the FTX funds, WebQ will deploy these funds, within the bounds of the law, to minimize the financial damages to their allies. WebQ will concurrently activate the full extent of their network to resolve this without casualties to our community.
Stonewalling LGBTQ+ wins
The efforts of these organizations, many of which have existed for over 30 years, have been hampered by the dirty donations. For example, the LGBTQ+ Victory Fund, in the 2022 election, got their first lesbian candidate, Becca Balint, elected to the U.S. House of Representatives in Vermont. The historic victory has been shadowed by the FTX saga.
Rueter said the situation has upset two of the most influential voter blocks. Leaders of the LGBTQIA+ advocacy organizations, for example, could get a meeting with any Democrat including the President himself, but many are furious with the industry. The queer community has incurred damages that the crypto industry isn’t even aware of and therefore has yet to acknowledge.
“On the Republican side, we’ve got all of the use cases to build a powerful economic case, but Democratic support remains lackluster,” said Rueter. “The industry is having a hard time getting any Democrats of significant numbers to the table. Women and the LGBTQ+ community are among the most influential voting blocs of the Democratic party.”
Both sides of the aisle are needed for the crypto industry to bring all stakeholders to the table, he said. “It’s imperative that we apply these technologies to domestic social impact, generate academic-grade data and deliver third party reports of the results of these programs,” Rueter said.
The current FTX-LGBTQ+ Victory Fund case highlights a pivotal moment where the approach to societal support is being put to the test with regard to vulnerable communities. Rueter is calling on the crypto space to demonstrate the power of blockchain as a force for good, beyond financial applications.